There are thousands of Journal Entries (JEs) managed by corporations every close cycle across countries and shared service centers and most of these companies struggle with the two different types of manual journal entries: Ad Hoc and recurring manual JEs. Recurring manual JEs are JEs that need to be repeated each period, such as accruals, depreciation & amortization. These are often very repetitive and could be costly when done manually. Ad Hoc JEs can be triggered by a reconciliation, such as when open items are recorded. Open items provide a measure of misstatement risk, sometimes affecting the P&L. This sensitivity to the P&L, and to financial risk in reporting, means there should be additional controls on scrutinizing adjustments which are non-recurring/non-standard. The manual JE process is risky for these companies because it lacks controls, proper approvals and management has no visibility of outstanding or rejected journals.
The traditional JE process is inefficient and very error-prone. Most companies rely on approvals by phone calls or emails which can take long hours and is a difficult process without surety the information is accurate. Not only can a manual JE process delay the close process, but it can also result in missing or inadequate supporting documentation and a lack of transparency.
The JE process can occur anywhere during the financial close. You can be reconciling an account and come across an item that needs to be cleared. This then may result in a JE. So, if you look at your JE process and how it impacts your overall Record to Report process, JEs have a huge impact on your final output. According to The Hackett Group, industry leading companies are automating 95% of their JEs and Trintech is also seeing this amongst our customers who have deployed Cadency® by Trintech. This is Mission Possible!
Cadency’s Journal Entry process is a fully integrated workflow which provides full visibility and ensures the information is accurately processed, approved and posted. Through the JE dashboard, you can have a direct view of the status of the journals and how many times a journal has been rejected – providing one source of truth.
Cadency Approval Process:
An administrator can set up an automated approval workflow based on journal details like company code and journal amount to ensure it is routed through for proper risk-based approvals. Journals can also have any and all supporting documents attached to it, making it easier for the approver to view supporting documentation for a journal. The email notification that is sent to an approver has a direct link to tasks, and the ability for users to add these to corporate calendars.
Account Reconciliation Integration:
Many JEs are created through the account reconciliation process. Prior to implementing Cadency, if there is a miss key, you would have to go to your ERP and make a separate entry with no connection between your reconciliation and JE. Now with Cadency, you can make a JE directly from your reconciliation and then post that journal to your ERP system and have a link between your reconciliation and JE.
Cadency Journal Entry has the capability to post to your ERP(s) directly with Trintech’s pre-built, pre-defined connectors for SAP®, Oracle®, and NetSuite®. With these connectors, you can now have real-time status on your JE, resulting in a streamlined the JE and reconciliation process. Read more about our R2R Automation Framework: ERP Connectors here.
Recurring Journal Entries:
Now you can proactively automate and define your recurring JEs for a set schedule and streamline the process, ensuring there is no error after the initial creation and significantly reducing the time and effort. You can now schedule an automatic posting for an accrual, depreciation, amortization or allocation journal. Only Cadency has a dedicated recurring journal entry dashboard, which gives you visibility to all your recurring journals.
With Cadency, you can now have multiple preparers on a JE so you can work and coordinate with other members of your organization who might have relevant information for your JE instead of having to rely on insecure forms of communication like emails or phone calls. Now, you can directly send the journal to the next preparer and have them fill out the missing information, all while still being the owner of the journal. The journal will route back to you at the end of the preparer workflow, so you can either submit it or edit it before submitting.
With your company’s policies top of mind at Trintech, you can now configure your templates with different rules and capabilities. Template access control enforces who has access to certain templates, adding another line of control to your close process.
Risk Intelligent RPA™:
With Risk Intelligent RPA, you now have the capability to link a JE directly to a Close task in Cadency Close. Once that journal is posted successfully, the linked Close task will automatically update and close, reducing the manual effort.Cadency is transforming companies’ close processes by increasing efficiency, reducing errors and time, along with providing full-time visibility across the full process. By automating the low value tasks, your team can now focus on high value items that are more strategic to your business.
Explore the Full 7-Part Series on Trintech’s System of Controls:
Part 1: Don’t Drown in Transaction Data When Closing – Light a Match and See Clearly
Part 2: Reconciliations: Part of a Global System of Controls to Ensure the Integrity of Your Financial Close
Part 4: (Intercompany) Prevention Is the Best Medicine
Part 5: How to Reduce Risk and Ensure Control Over Your Intercompany Transactions with Cadency’s Detective Controls
Part 6: How to Excite An Accountant During Close
Part 7: How to Measure the Impact of Your Control Environment Using a Framework for Compliance
Written by: Muna Syed